How Companies Are Overhauling Supply Chains to Ease Bottlenecks | WSJ
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- เผยแพร่เมื่อ 30 มิ.ย. 2024
- The Covid pandemic has strained global supply chains, causing freight backlogs that have driven up costs. Now, some companies are looking for longer-term solutions to prepare for future supply-chain crises, even if those strategies come at a high cost. Photo Illustration: Jacob Reynolds
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#SupplyChain #Manufacturing #WSJ
There are tradeoffs between efficiency and robustness. Efficient systems are sometimes fragile. Robust systems have some redundancies. For goods and skills of strategic importance, having regional or onshore capacity is very needed. It's like insurance in case of war.
my man. if only people understood this.
That's it!
If leaves it to the free market, most strategies or operations are profit orientated and shortsighted. It takes a strong political will to enable onshore and hopefully we are looking at reshoring our manufacturing industries cutting down carbon emissions.
There is an alternative - stockpiling of inventory, aka a strategic reserve.
@@Avantime in war situation? I sincerely hope not... The recent CCP hoarding of 🌾 comes to mind.
However, stockpiling has always been used when raw materials become unexpectedly over supplied.
I ordered a load of tiles from Guangzhou, China. It took 18 days ocean shipped to LA, California. Then from there they took 38 days by rails to NYC.
You mean this video is a lie?
THERES A RAIL WAY SYSTEM FROM CAL TO NY?
That's not true, there's not a railroad system from California to NY, only airline shipping and road transportation
@@TylerSolvestri you sure?
Sounds like communist misinformation. Should’ve fly the stuff and take 2 days rofl
Regionalization is intelligent. They can get back supply chain resilience at the cost of a small amount of supply chain efficiency. Big picture wise though there should always be product available AND if for some reason one region has a problem...product can be shifted from one region to help with shortages. That's if companies do things intelligently and not on the cheap, those companies will have a problem at some point as well.
I'm not sure if you are american or not but I'd rather not give china an advantage of still keeping the manufacturing in their hands but instead back in american hands.
@@infini.tesimo ikr, I sure most american consumer is willing to pay more than 2x the price of the same item previously
Too long supply chains have had troublesome effects on the global economy anyway. Let's see if qome positive change takes place.
Mexico is a perfect country for smaller businesses looking to nearshore manufacturing. Cheap labor; a larger young population, skilled in manufacturing, and above all they’re integrated into the USMCA free trade agreement with the US and Canada. Not to mention Mexico has the most free trade agreements in the world. So that gives even more up side potential for businesses that want to export elsewhere.
The most important part is having hard working workers
Is there a reason why what you suggest hasn’t occurred to a larger extent? Corporate profits.
Modern production needs high-tech assembly lines with high rate of automation
Huge number of engineers and tech workers. With constantly changing product versions - up to a few product lines a year
It's not a sweatshops from 1990s anymore
Mexico lacking all of this factors
The only place where you can get cheap and at the same time modern high-tech manufacturing is China
At this point in time no country can better produce an item at the desired/mandated price point than China.
Sadly our inept government is making foreign investment a risky business for companies. There was a record outflow of capital in back to back years (2020 and 2021). Having said that, we are indeed hardworking people.
I'll give you a supply chain/engineering analogy that might help to clarify the issue. As somebody that has worked in oil refineries, we build tankage into many areas of a plant for the express purpose to 'buffer' one processing unit from another when an upstream unit has manufacturing problems.
Operations wants these tanks, but they are expensive to build/maintain so there's always a desire not to install them. However, they become indispensable during major plant issues. That's essentially what happened globally. There was not enough 'surge' capacity in the global supply 'system' to effectively 'buffer' the issues. Hence, you have tremendous backlogs sloshing through the system. For example, a CNBC video on this subject made the comment that it was taking twice as long for a ship to make the trip from an Asian dock to an west coast dock.
None of this is surprising to me having watched many plant upsets over the years. You are always thankful for those storage tanks when the major upsets come along. If you don't have them, you get our current worldwide global supply chain.
This will take months to line itself out. That's because the current supply chain was created to minimize cost when there are few 'upsets' occurring. They were not designed to be robust in the face of disturbances.
Great comment. Reminds me of, "The Goal" by E. Goldratt (it's a must-read if you haven't read it!).
Kudos for getting the map of India correct in the maps !
They showed the whole region of kashmir as disputed
One of the biggest bottleneck is PORTS!! Why do we only have one major port in LA? Govt needs to build 30-40 ports around our coastal states
Ain't that easy. You can't just build a deepwater port in shallow littoral areas; you need depth and then you need to dredge on top of that to accommodate the big boats.
Im from bangladesh and they are probably paying $2 to assemble the boot compared to USA where it might take $10-15
Regionalization is supply chain resilience by another name. Yes, some investment will be required but you loose a lot more if you're unable to fill orders in a timely manner, if they get fulfilled at because of geopolitical sensitivities.
It's high time to remove China from supply chain equations and look for other developing countries.
More economic colonialism wont solve the problems created by neoliberalism/colonialism.
No, it's time to remove the USA from the consumer chain equations. Seriously, China is the largest consumer market. Why bother selling anything to the US?
@@judsonmeraw6294 Lol, that would just make other countries richer instead of keep feeding the Chinese with their childish behavior
Americans are losing in international economic competition.
@@r3dpowel796 how so?
Mexico is going to be the next big thing on the western hemisphere, with a market as large as the US right next door and a favourable internal demography, Americans and Mexicans are set for the next two or three decades. Definetly an alternative to china if American politicians decide to run with it in the long run.
I actually see Colombia as a winner in the region. Free trade agreement with the USA plus available labor and ports in both Pacific and Caribbean waters are huge advantages. Stability and security is better than Mexico now too after FARC mostly went to the jungle
For Mexico to work, the US needs to start financing construction of highways in and other key infrastructure in Mexico. Think Texas through Monterrey to Mexico City, and California through Guadalajara to Mexico city. Already Monterrey is miles ahead of many other Mexican cities because of its manufacturing base supported by a half finished highway to Texas.
And I think india will be the winner in long term
@@moresport1247 thanks . i am from india. :).
Wouldn’t it be cheaper to just increase inventory a bit rather than building entirely new factories in other countries?
The point is because once China got rich we won’t be able to take advantage of this trade as much as before. Profit will reduce over time, because their middle income population wants to have decent life too.
It might result in opposite way,
Stocking inevitably increase the cost.
Choice is between short term fixes or long term planning.
Storage is expensive.
Storage is even more expensive. Because you have to maintenance and it takes longer times for new products to get to customer.
Agreed storage would make more sense. US has many closed down factories doing nothing as it is and no investor willing to pour money into them to get them running again.
I believe that the cost of reshoring is overall far higher that bearing and enduring a few years of products shortage and cost increases due to pandemic.
but who’s to say it’ll just be a few years of product shortages? china has said it won’t be the manufacturer of the world anymore, so change has gotta happen somewhere
There is a new cold war between china and the west. They want to control the south china sea where a lot of trade goes through. These are all very risky things and this situation won't go away in a few years. If companies were smart they would start moving large parts of their manufacturing to other parts of the world if they want to stay in business.
Generally yes, though on the margin there will be reshoring and near shoring
There was reshoring during the beginning of the pandemic when China was in a lockdown but those companies that reshored quickly regretted it because as the pandemic spread, their home country and the rest of the world was lockdown while China's economy went back to normal. These companies lost manufacturing capacity in China and are now stuck with supply chain issues and high costs. It is just better to wait the supply chain problems out.
@@rcbrascan I'm not doubting you at all, thanks for the info. Do you happen to have any sources regarding the regret?
I know anecdotally that some companies have had issues during re shoring, however I never knew about the regret.
As long as lean and JIT are metrics drive like say GM and not objective driven like say Toyota , there will be consecutive hiccups in the entire chain. Even though lean and QC and many good management techniques were thought of in the us first ( Deming, Juran and Taylor) they have been unable to deploy such techniques properly.
No mention of labor cost in each region
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What does this have to do with supply chain when companies stockpile goods. US simply don't have good reliable distribution network in US.
It is not just labor cost, but capital, technology, skilled labor and availability of tools/materials. A supply chain that took decades to build will not be remade overnight and crates redundancies that also increase costs, and resource/labor scarcity. Politician's Wet Dream.
This wont work in long term.
The cost will go 5 or 7times higher than before.
It will work when the freight rate from Shanghai to LA is 12k... Imagine you are just shipping some kind of basic and cheap stuff.
@@anonymousaccount3414 they ship cheap basic stuff in bulk so it evens out.
Reshoring might work for a few high value products, but the west certainly doesn't have the type of labour force needed to work at those mind numbing and repetitive factory jobs where cheap, mass production items are made. The US companies will probably move a lot more industry to Mexico and Europe will operate more in the Balkans.
I’ve never really understood why there isn’t more of an effort made to make a strong American Union between North Central and South American countries. Seems like there is everything we need right here on these continents.
@@plagship cause central and south America countries have riot, revolt,government change all the time. It better for USA to have a weak neighbor they can control then a strong neighbor that can compete with them on trade, lol and USA used the central and south America as their garden for drugs
@@khanhnguyen-tt3ff I don’t disagree with any of that, but I’m looking across the pacific and I’m thinking it looks like a poor decision. Strengthening the bonds of the American continents seems like a good move now.
@@plagship it turn out well for the USA they basically can get anything they want form the central and south America, the only reason they didt do yet cause the USA want to prevent another powerful country become a superpower that can challenge them
Great video. Keep it up
this is like how companies are hoarding supplies to raise inflation
Big facts!!!
Reshoring makes lots of sense, it will cut down carbon emissions too. The real problem is we all addicted to buying, often buying things we don't need. For example, quick fashion ending up in landfills.
nonsense
@@whousa642 I know. Our wasteful behavior don't make sense at all. It's estimated 1/3 of our food purchases ended up in bin.
@@vanessali1365 // You make nonsense. Wasteful according to whom? You? Who made you the dictator?
@@whousa642 according to the climate change scientists.
@@vanessali1365 // Shame on you
I'm the end of the day, if the cost is too high, consumers won't buy, even if it is in the shelf 😂🤣
Indeed, if there are more people getting paid decent factory wages in a country, there will be more consumers who can purchase the very products that are being made. Workers are also consumers!!! Think about it.
Amazing information about nearshoring , reshoring and regionalization
If the problem is truck driver shortage, then all the strategies mentioned wont solve the problem. As far as i know, the current "broken link" in the supply chain is between the port to store shelves. Its not between the factory to the ports
@@steve-uo3lw True. Eventually AI robots will rise up and take over the world thereby eliminating the need for supply chains
Thanks for using the right map of India.
Great knowledge
Exactly, especially in PCB Assembly industry,not only Cov, but also trade wars bettween usa and China, War battwen Ukraine and Russia, trade barriers both of such effects our replastionship with customers a lot, but thanks to our branches facilities in 8 countries, we did help to solve such issues, and let's us have the ability manage supply chain so well, and of course keep the cost at the same lever. This video from WSJ is really a good one, thanks, just find one telling the true.
The next mega-business strategy will be in the Eurasian continent regions with modernized AI and robots to do the job it is cheaper and reliable long terms. Moving to Mexico would only be very expensive because they relied on human resources dependency.
The COVID-19 pandemic highlighted the importance of comprehensive logistics solutions. At our company, we've been dedicated to providing top-notch services in warehousing, aviation, 3PL logistics, train logistics, ocean logistics, and more.
Good report made by WSJ
Nice video.
We really been doing the same shid since the 40s
What's the difference between private container ships and other container ships?
Why do private container ships not have any problems?
Very interesting video, I learned a few new strategies that sound like smart ideas and may fix some problems. The costs of moving those offshore supply lines is a lot, so this may be something that won't be viable for most small businesses. As such time will really show how supply chains will change in the future
this is only good for SMEC as for MNC or LCC the investment and cost is too high to move production nearer to be of any use/benefit nor justifiable against a short (~3-8 years) shortage period.
Brands can't just reshore/nearshore their productions based on some reports. refining an manufacturing industry takes a tons of experience and years to build it strong. This is where Asians countries comes into play.
Mam, nice explain.
In my view, rather than taking regionalization and other strategic moves, a company can think of taming the costs by allowing the place of assembly to be a point of distribution. Like in the example given, the company is tracking down the demand for shoes from nearby Bangladesh (the distribution point). These are crucial because they can lower some costs and produce sustainable reporting that is increasingly needed from impactful investors whose numbers are increasing day by day. God Willings
At the doorstep of many potential markets and with a growing shipping capability, watch Mexico rise in the next decade.
i am here MX rising. Gringos will stop talking smack.
Regionalization, re-shoring, near-shoring… don't tell us these will come at higher costs!
It’s been challenging for companies, not only with supply chain shortages and unpredictability, but also with inflation cutting into profits, labor shortages causing lost sales, and all while trying to enable a virtual work model.
It’s intriguing that even with these challenges, there’s not a lot of business news on companies using Operational Excellence to address these opportunities. That tells us that, even though Operational Excellence has been around for a long time, companies still struggle to embrace and implement these strategies at a macro scale, especially in Supply Chain and Industrial companies.
I wonder, why not?
Let’s jack up the inflation! Go America!
why would anyone order something online if the product is not in a nearby warehouse which is visible in webshop page
I wonder what effect shifting manufacturing would have on globalization and how factory workers in Asian countries will react to the lack of job security.
you already see manufacturing jobs moving from China to other more poor asian countries such as Vietnam etc... so this manipulated globalisation makes the already establish rich more rich, and whilst some 'winners' might be created, it forces more people to become losers.
4:26 Soooome….. body once told me…
There must be a underlying incentive to this. This could also be a great strategy to deter china.
not
Instead of commenting in utube, you should start a business to deter china.
@@NoName-of8dq That's a good point Diane, thank you
how is making product twice as expensive, as this clip estimated, a method to deter anybody?
Could WSJ cover Houthi problem as I just left a story out of New Zealand 🇳🇿, where they are experiencing 2 week shipping delays? Thank you very much beforehand...
It means that American economy looking ways to survive?
Someone enlighten me. I’m new to everything global and everything, my perspective to this is overall positive. I believe focusing on producing, manufacturing etc, near home I see it being overall positive, yes in the short term would be expensive and headaches but the long term benefits make it sweet and abundant. New infrastructure hopefully green and effective to produce income in home. The con I see to this is sadly products would get a little expensive and yes not alllll products have to be made home but most and the mostly used, but the con I see would be the product price go up and honestly as a consumer im all for it for ex new iPhone 1000 and being made home or most of it, would make it 1500-2000 for a new one I wouldn’t honestly care. Plz someone start a conversation with me, correct me and enlighten me
Supposedly the reason behind products costing more when production is moved closer is to pay workers more which would increase overall disposable income and buying power, price of product would have to adjust to demand in the long run and cheaper options would be introduced to consumers. Don't worry hopefully you'll still be able to buy that iPhone ;)
Well, today it would be good to move to manufacturing closer to home. It would bypass a lot of the congestion seen at many ports and decrease transportation costs. But unfortunately, it would significantly increase labor costs and material costs, which might either negate the positives of moving closer to home or make the investment of building new manufacturing facilities not worth it. For really big businesses with products that consumers don't care about the cost it would make great sense to do this, while for smaller companies, with products consumers will not buy if the price increases, this doesn't make any sense at all. At the end of the day if a company is not able to make money or profit in some way they will not change their strategy.
No matter what to do, companies still got the same mission: sell products at the most competitive price to maximize profit.
Why not just upgrade the logistic of the port, make it comparable to modern level, so the cargo ships would not stuck at port for weeks.
Union workers won't allow it.
Never in history has this happened. Never.
It is a bit idealism for regionalization. The only country can do so is China at the moment, other countries can’t produce all items onshore. It took decades to produce everything onshore. When the company has diversified its supply chain, it will face quality control issue, coordinating shipping and warehousing, and still facing shortage when one supplier gets into trouble (unless all suppliers keep extra capacity to cover the shortage, which is very unlikely).
The moral lesson of all supply chain problems: US government should not interfere normal business flow by imposing sanctions at wrong time ! This is a typical case of shoot yourself at the feet.
How can we make generic content about supply chains in the news to get clicks?
Picture being a sailor and getting all this overtime for a ship just floating in the middle of the ocean eating for the backlog to clear out.
for weeks and it sucks and who says they get overtime ?
Aptly described...the future of supply chain will look different..
So what they did is realise that in order to gain the benefits of china and Bangladesh, you can go to serbia.
Bangladesh represent 🇧🇩
Why products becoming more expensive is just the factories and resources moving out of China to new cheap locations. And the cost is being paid by the consumers so this will slowly normalise
You should read Peter Ziehan's books.
Capital always flows to the place with the highest profits, which is capitalism
Us uk doesn’t have work force for Essential jobs. Manufacturing in us and Uk?
Lol! It’s dumb to continue to relay on long supply chain rather than making it on the place they sell it.
Its mot as easy as it sounds
@@alexturlais8558 never said it easy or cheap. It’s a matter of independence from other countries turmoil.
Everyone knows that, but money talks. Are you paying for them the costs to setup and maintain that infrastructure along with hiring locally?
you sound like a rich guy go funds them business.
Circular economy is the future....?
True
Any big pharma working on a vaccine for consumerism?
Somethings are already regionalized. Like fresh fruits and vegetables. Or big heavy items like raw steel or coal. In the end when it comes to the free market, cost and profits always win. There is no point in regionalizing items like iPhones when it comes to the end price. No one wants to pay 3x the amount for a regionalized iPhone unless they have no other choice.
Also even if they wanted to, it would be near impossible to regionalize an item as complex. The machines, the knowledge and materials that make the components are far flung and often is monopolized
I don't see how any of these strategies can ever work for consumer electronics. And let's be honest, even regionalized chains like fresh produce don't exist in a vacuum and is also dependent on things that are not regional
That's why it's not good to send our manufacturing companies in cömmünïst or dïctätor countries such as chïną, Vietnåm, thåilånd. But western companies want their cheap labor. So...
😏
iphone 13 made in those country still cost you $1500, imagine iphone for $3000
Maybe you could put it this way, “But me as a consumer want cheap goods”
wow this segment was almost not complete schlock....I didn't know that was possible these days
Like Six Sigma, you can easily write a book with this e.g. not just about disruption to dual suppliers (common in electronic goods), MOQ or exchange rate, it can be QA + conformance to local standards that differ to your own, 2nd JIT are very sensitive to this.
So before interfering with production operation or given a deadline or "stopped" for transfer, a good executive, would allow time spent on simulation run on how it could be transfer and "knowledge capture" before actual transfer.
Most executives only care about cost reduction and suggest moving factories, but completely forgot about hidden cost & time to reach maximum yield (realistically), where SOP + other existing paperwork are not enough for smooth transfer, as it beyond the scope of ISO 9001.
Amazon should build its own port and create a shipping line
I have one answer- USA.
its full of boxes travelling from one olace to another and then cx returns it.🤣
Stuck at sea? more like Stuck at US PORTS!! hahahaha.
I just bought a $40 official LA Dodgers 'official major league baseball' cap, why is it made in China, why cant they make it in America?
Because, American companies require you to insure every single employee you hire. That costs the company a lot of money. So they give the work to other factories all over the world where labor is cheap, and don't require you to insure you're staff.
I.e. sweat shops, and child labor. This is why almost nothing is made in the U.S.A anymore, because companies save money by doing this.
Future supply chain crises may never again be as all encompassing as this COVID pandemic. So why bother with all this mitigation? Invest in vaccines for everyone instead and let globalization continue. This is good for business, prosperity and peace.
that complacency will make you vulnerable. better to invest in factories at home and adequate infrastructure to move materials and product
Bangladesh! 🇧🇩🇧🇩🇧🇩🇧🇩🇧🇩🇧🇩
near shoring, just what america needs
A run of the mill TH-cam channel would have done a better video?
I don't feel one bit sorry for companies that laid off American worker's and moved to China, and are now having supply issues. Greed.
How's that make any sense all that running around the globe to make 1product only to send it back to those places for sale?
its all about money. US government have been trying to make US dollar the most valuable for along time and devalued foreign currency. but that of course backfired. which put USA not competitive against foreign economies.
1:06 🇧🇩🇧🇩🇧🇩🇧🇩🇧🇩🇧🇩
2:00 reg
Logistics on the supplies built transportation to one part dumb then back why not open one in America
All of this points to one thing, Inflation. Inflation is here to stay
Everyone talking about Mexico. The US needs an investment fund to finance the construction of good highways from Texas and California to Mexico City through Monterrey and Guadalajara
What about the wall that was promised?
@@rcbrascan is that a rhetorical question, or are you being serious?
hello
Fear and control
We need to thanks the former PRESIDENT Donald Trump for the dismal state of the supply chain😁
You heard this right WSJ says Taiwan is a country
it is
or just economically an entity?
@@hyy3657 communists in china then is a Junt a imagining itself in place of rich and elaborate tradition and is left wanting.
Pretty low content video. Not much insight into the quantitative trade offs in these strategies or how deeply impacted the present global system is being impacted.
Chinese companies have a unfair advantage in this .....
They are the world engine today ....
.... and in 9 months these companies will only look at profits 📈, back to normal business and quickly forget about supply chain issues and risks. 💰 🤑 💸
What if Mexico and China become rich?
Pitajee Jain. china is already rich
@@PHlophe , Not exactly. Their per capita annual income has just reached over ten thousand K USD last year by the IMF document and standard. They are still a developing country.
I strongly oppose wsj's map showing kashmir as a seprate country from India .
Simple: End Just in Time, make in America, have storage facilities
can not and will not happen
prices will x2, x3 for sure
Invest in India which is a rapidly developing economy!
Invest in India.
That's the only way the world can solve the supply chain problem.
So The Strands Of The Global Economic Web Have Snapped,
And Everybody Retreats Back To Their Corner ?
Does Not Sound Like A Recipe For Long Term Peace.
Ok, but how will you supply the nearshored factories?! For most products, those supplies will still come from other countries...